Literature_Review_of_Operations_Improvement

Portsmouth Business School Principles Of Operations & Marketing Management (U20590) Student number 671740 Table of Contents Part One: Literature Review 3 Performance Measurement 3 Performance Objectives 3 Performance Standards 4 Benchmarking 4 Four Pitfalls In Performance Measurement 5 Approaches to improvement 6 PDCA Cycle 6 DMAIC cycle 8 Part Two: Case Study --- Toyota 12 Continuous Improvement 12 TPS --- Toyota Production System 13 Kaizen 14 Kaizen And PDCA Cycle 15 Failure Of TPS 17 Appendix 17 Lean Operations And Just-In-Time 17 What is just-in-time' 18 The impact of JIT 18 JIT in services 19 Reference 19 Part One: Literature Review Performance Measurement Performance measurement is used to evaluate some kind of organizational entities, such as organization, process, team or individual, in terms of quality and quantity that is achieved in the mission, objectives, goals, and etc. Performance can be measured in terms of the degree to which the operations fulfil performance objectives at any point in time, in order to satisfy customers. Improvement is the activity of closing the gap between the current and the desired performance of an operation or process. (Slack et al, 2012) There are two major influences on deciding improvement priorities, the needs and preference of customers and the performance and activities of competitors. (Baxter, L. F., MacLeod, A. M., 2008) Performance Objectives There are five performance objectives, which are to be achieved: quality, speed, dependability, flexibility and cost. It can represented on a Polar diagram. The polar diagram below illustrates the relative importance of each of the performance objectives for these two services in different stages. The main point here is that the two types of service offered by the company have very different characteristics in terms of which performance objectives are important. As time goes by, the situation will vary. Any company must understand how its different products and services require different objectives and how to react in different situations. (Dutta, s. & Manzoni, J., 1999) Performance Standards After an operation has measured its performance, it needs to make a judgement as to whether its performance is good, bad or indifferent.   There are four ways of comparing current performance to some kind of performance standard: Historical Standard, Target performance standard, Competitor performance standards and Absolute performance standards. These lead to the four pitfalls in performance measurement. (Brown, S., 2001) Benchmarking At its simplest benchmarking merely means finding out how someone else does something similar to what you are doing and how good they are at doing it. An operation can then compare its own methods and performance against this benchmark. Performance measurement plays a pivotal role. When used properly, it can greatly improve organizational performance. While one the other hand, improper use will become the stumbling block of organizational change and performance improvement. Effective use of performance measurement will give a timely feedback on the state of the business operations. Based on such feedback, one can determine whether the enterprises are moving forward to their own organizational goals and how to optimize and reorganize training of employees. As a reflection of the results of business operations, performance measurement provides the enterprise with the direction of improvement in a practical basis. (Brown, S., 2001) At the same time, the performance measured used improperly may cause a blow to the morale of the organization, reduce team efficiency, and lead to preventing the improvement such as quality improvement. The four most common pitfalls presented in performance measurement are listed below. ( Thomas, M. 1994) Four Pitfalls In Performance Measurement I. Empiricism: focus on history, and ignore the presence It results in analysing management based on historical information. This means that results achieved today are based on management decisions from yesterday. However, one the other hand, today's decisions do not affect future results very much and often do not have the value of reference and prediction. II. Range dislocation: focus on the internal, and ignore external Performance indicators designed by many companies focus on meeting the needs of the internal. This performance measurement approach ignores the needs of customers. This requires first clearly understanding what is most important to customers, and then considering how to provide customers with products and services. Measurement of the performance of managers and departments should be designed from the "customers - service - producer" chain. III. Improper object to improve: focus on individual, and ignore structure A lot of evidence shows that 85% to 90% errors of enterprises are from the organizational structure, systems and processes, but most managers are accustomed to find the problem from and processes of the individual rather than the structures. IV. The disunity of knowing and doing: focus on re-measure, and ignore action Performance measurement is only an indicator of the reporting system. The results can only tell the status of enterprise performance. The improvement of performance depends the key processes to analyse the systems in order to improve and support the relevant organization. Performance indicators lead to finding the crux of the problem, but the more important thing is the improvement action taken to address these issues. If the performance measures cannot lead to a performance improvement measures, the work done is a complete waste. Performance measurement is an essential tool for improving business performance. It is undoubtedly important to choose the right tools. Equally, how to properly use the tools together to determine the ultimate effect of corporate performance management is also essential. Approaches to improvement Improvement can be represented by a never-ending process of repeatedly questioning and re-questioning the detailed working of a process activity. This repeated and cyclical nature of continuous improvement is usually summarized by improvement cycles. PDCA Cycle PDCA cycle is also known as Deming cycle or PDSA cycle. Famous study of Deming cycle was originated in the 1920s, first with the father of statistical quality control, Walter Armand Shewhart. At that time he introduced of the prototype of program Plan-Do-See. Later Deming enhanced Shewhart's PDS loop and develop it further to become Plan-Do-Check/Study-Act, a continuous quality improvement model. (PDCA - the scientific method, n.a.) Deming cycle is a continuous improvement model, which includes four repeated steps of continuous improvement and continuous learning, which are Plan, Do, Check / Study and Act. Deming Cycle is also sometimes known as the Deming wheel or Continuous Improvement Spiral. Deming cycle is closely related to the concept of improvement and Just-In-Time in production management There are four steps in the PDCA Cycle, as shown below. (PDCA, n.a.) I. P (Plan) - planning, and determining an action or a series of action-oriented programs through collective discussion or individual thinking II. D (Do) – executing the plan, and implementing the plan III. C / S (Check / Study) – investigating and studying the situation of implementation, and identifying problems IV. A (Action) - Recognising successful experience, summing ​​up and learning from the failure, and referring the unresolved problem to the next PDCA cycle (Edwards, D., 2013) DMAIC cycle The DMAIC model is a method of operation that implements 6-sigma. DMAIC is the most important and most classic management model in 6-sigma management, focusing primarily on quality improvement in existing processes. All professional statistical tools and methods related to 6-sigma management are adopted throughout each of the 6-sigma quality improvement projects. DMAIC model is showed as follows: (Pete, A., 2012) I. D (Define) Define means identifying the problem to be solved. The key factor is to identify customer requirements, and determine the impact of customer satisfaction. When defining the problems, one must combine the situation in order to form a powerful 6-sigma group. In this step, the key issues that must be seized are: What are you doing' Why should solve this particular problem' Who are your customers' What are the needs of your customers' How did you get it done in the past' What are the benefits if making these improvements now' II. M (Measure) The measurement represents calibrated Y measurement system. The collected data is for preparing the quantitative analysis. Measurement is the basis of the analysis of 6-sigma management. III. A (Analyze) Analysis is the use of a variety of statistical techniques and methods to identify the root cause of the problems. Many factors can affect product quality and customer satisfaction. Therefore the use of statistical methods to identify the main reasons affecting customer satisfaction is important. IV. I (Improve) Improvement is to determine the main impact x on y and seek the relationship between x and y. Improvement is the key step to achieve the objectives. V. C (Control) Control means controlling the deviation of the main variables in the permitted range. Without job descriptions and process control program, there won’t be the existence of the control. Control in any of the early stages of the process is crucial. For example: A defect is discovered at an early stage, $ 1 spent Found a flaw in the design, spend $ 10 Found a flaw in the experiment, to spend $ 100 At the scene found a defect, cost $ 1,000 Part Two: Case Study --- Toyota Continuous Improvement Continuous improvement means the improvement and perfection made on the enterprise different areas or working position, originated in the TWI (Training Within Industries) and MT (Management Training), TWI after World War II, the U.S. arms industry is widely used industrial internal training, developed in the United States in the 1940s, when the TWI was introduced in many countries, the impact in Japan, at least ten million Japanese business leaders, professionals and staff members are subject to the TWI training, have a profound impact on the theory and practice of Japanese management. TWI training consists of three parts: I. JIT (Job Instructional Training): leaders recognize the importance of adequate vocational training to the employees as well as how these training; II. JMT (Job Methods Training): ideas on how to improve and perfect the methods of work and practice; III. JRT (Job Relations Training): a superior-subordinate relationship and leadership. In Japan, the training is done by different professional organizations such as the Japan Association of Industrial Training. At the same time, many of the leading Japanese company will TWI based on the need to make the appropriate changes to train their own potential leader. MT is invented by the U.S. Air Force. After World War II, Japan introduced to the industry, and after the nearly 50 years of unremitting efforts of the Japanese Industrial and International Trade, at the end of 1994, more than 300 million Japanese business leaders accepted MT training. Now in Japan, in order to enter the enterprise leadership, MT training certificate of completion is almost a must. MT training so that the leaders of the Japanese business community knowledge of the following three aspects: I. Understanding of the relationship between employees and the importance of personal relationships II. Continuous process and product improvement and improved method and value III. Working methods combining the benefits of scientific and rational use of the "Plan - Do – Check In short, the Japanese business community through the introduction of TWI and MT, digestion and absorption, combined with the actual situation in Japan, has developed a number of management theory, such as total quality management (TQM), just-in-time system (JIT), and gradually formed complete KAIZEN system. TPS --- Toyota Production System The Toyota Production System, i.e. TPS, is an integrated socio-technical system, developed by Toyota. PDCA and scientific problem solving, is also known as a system for developing critical thinking. At Toyota this is also known as "Building people before building cars." (Toyota Production System, n.a.) The main objectives of the TPS are to design out as three ‘M’ below: I. overburden (muri) II. inconsistency (mura), III. to eliminate waste (muda). This actually reflects lean manufacturing, which TPS represents. TPS is based on two pillars, Just in time and Jidoka. It is illustrated as in the image. Kaizen Kaizen is the key point linked to the idea of improvement. Kaizen refers to philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering, supporting business processes, and management. It was originally a Japanese management concept, referring to the gradual, continuous incremental improvements. Kaizen means improvement involving everyone, every aspect of continuous improvement: from the highest management department, management to workers. "Continuous improvement" strategy is the most important concept in Japanese management sector is key to the success of the Japanese competition. Kaizen is actually a lifestyle philosophy. It is assumed that should be kept to improve every aspect of our lives. The key factors of Kaizen are: the quality of the efforts of all employees, intervention, voluntary change and communication. Continuous improvement to be as part of the system-level applications and make improvements. Flowing through the pull-up system to improve the delivery time, the flexibility of the process and the response speed of the customer, the improvement activities through improved process of the company. There are six steps to improvement, as listed. I. Discover improvement potential II. Analyze current methods III. Generate original ideas IV. Develop an implementation plan V. Implement the plan VI. Evaluate the new method Kaizen And PDCA Cycle To ensure the import of Kaizen to be successful, PDCA cycle must be first introduced. This can be illustrated in the diagram below. I. Plan is to set a target or action plans to achieve the goal of improving the. (Kaizen is a dynamic process of continuous improvement, so the goal should continue to be updated). II. Do is implementing as planned. III. Check is to test whether the work is executed according to plan, and development toward a predetermined direction. IV. Adapt is pointed to by the new standardization work steps to avoid the recurrence of the original problem, and setting targets for further improvement. Any process begins when are unstable, must first of this change process to stabilize before it can be introduced PDCA cycle. At this time you can SDCA cycle standardization (ISO)-do-check-adapt (adjust)] SDCA cycle is to standardize and stabilize the existing process, and the role of the PDCA cycle to improve these processes, SDCA to maintain focus on the PDCA perfect only when existing standards exist and to comply with existing process stability before they can enter the PDCA cycle. Failure Of TPS The theory did failed in the reality after so many years of success. philosophy known as the Toyota Way ("continuous improvement, respect for people") was battered by the recall of nine million cars worldwide in 2010. The setback caused collateral damage to the reputation of TPS and revived questions about such silver-bullet theories of business excellence. TPS failed for the first time. Looking back to the history, TPS is the outcome of the post–war economic situation in Japan. Nowadays, Toyota has increasingly moved to lower-wage Asian destinations. Post-lean production was more worker-friendly in Japan but was not always exported to overseas factories. TPS is altered overseas by national differences such as skills training. In the US and Thailand, recruits have lacked trouble-shooting skills to deal with production problems, which has impeded the transfer of Japanese work practices. The essence of TPS, or lean production, therefore, is debated. There are so many things to be taken into account in the process of operation’s improvement, just as I talked in the start of this case. There are a lot of factors in success, but it does not take much for things to go wrong. (Driving Down Costs, 2012) Appendix Lean Operations And Just-In-Time Just-in-time (JIT) ideas have, arguably, been the most significant influence on manufacturing operations in the last twenty years. Not only that, but it has also had an impact on service operations, especially ‘back-office’ service operations. Increasingly JIT is being called lean operations practice. In this form it has broadened to become a philosophy of how operations should be managed. This philosophy stresses an avoidance of waste in all its forms, high levels of quality and reliability and fast throughput time of transformed resources. However, some authorities would argue that it is misleading to separate out JIT as a distinct and separate philosophy of operations management. They would argue that so many JIT principles are now accepted as the orthodoxy in operations management that these principles should be applied throughout the subject. While this may be true we believe it is still worth separating out JIT as a coherent set of ideas, the better to understand how they impact on all types of operations activity. What is just-in-time' Just-in-time (JIT) is an inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs. High levels of inventory act to disguise the real state of an operation and prevent the people in the operation from being motivated to co-operate in making their joint processes more efficient. When reading this description of the JIT approach try to bear in mind that when it was first articulated in the early 1980s, it was tremendously counter-intuitive. Many people at the time had great difficulty in understanding what the JIT approach was trying to do and then accepting that such a different approach could improve their operations. For years inventory had been regarded as something which was necessary to keep the operation running. Furthermore, keeping the operation running was seen as the main objective of operations management. The utilisation of processes was regarded as the ultimate measure of how effectively operations managers were using their assets. Unfortunately, some people who saw the benefits of JIT went too far in the opposite direction. They led to an almost evangelical campaign against all types of inventory within any operation. They tried to raise quality standards, sometimes too far and too fast. This led to some implementations of JIT not being as effective as they could have been. However, now most operations managers understand the power behind the JIT logic and apply it is a sensible and appropriate manner. The impact of JIT It shows the outside of a very large ‘multi slide’ press which presses out car body panels. In fact you can’t see the machine itself, just the outer casing of the machine. It is big. Look at the size of the people in the shot to judge its overall scale. Outside are five ‘press tools’. These are the pieces of metal carefully shaped to the finished profile which is required on the body parts. It is these which the plain sheet metal goes in between in order to be pressed into shape. Each of them weighs several tons. Before JIT highlighted the importance of fast changeover flexibility for such process technologies, it would often take several hours to changeover from one of these press tools to another. At every changeover the old press tool would have to be unbolted from the machine, moved out of the way, the new tool moved into place, aligned carefully with the press itself, bolted into place and so on. Moving press tools weighing several tons around was slow and cumbersome. Now the press tools in the shot are loaded onto automatic slides which are set at the right height for quick slotting into the press tools. Much of the testing and alignment is done outside the press machine while it is still working on the previous batch of parts. Specially designed fixtures locate the press tool firmly in position, quickly and accurately. Similarly the old press tool can be released and slid on to its own slide and taken out of the way very quickly. The changeover that used to take several hours can now take only a matter of minutes. A very dramatic reduction in time which allows for more changeovers and therefore smaller batches. JIT in services Although JIT was developed in manufacturing operations, many of its ideas can be adapted for service processes. In some ‘back-office’ service operation this is not too difficult. In high visibility service operations with high degrees of customer contact, it is less easy. Nevertheless going back to the original three principles of the JIT philosophy (avoid waste, involve everyone, improve continuously) one can see how there is no fundamental clash between such principles and any kind of service operation. Reference Baxter, L. F., MacLeod, A. M. (2008). Managing performance improvement. London: Routledge. Brown, S. (2001). Operations management: policy, practice and performance improvement. Oxford: Butterworth-Heinemann. Dilworth, J. (1996). Operations management (2nd ed). 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